Growth in India’s manufacturing economy rebounded in July, with the PMI rising since the prior month, on the back of strong growth in output amid surge in new work. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance came at a six-month high of 52.7 in July, from 51.3 in June.
As per the survey, growth showed manufacturing business conditions across India improving further, with a solid and accelerated increase in new orders leading firms to raise production accordingly. Growth of new orders gathered pace across the three broad areas of the manufacturing economy. Reflecting the rebound in new orders, Indian manufacturers raised their buying levels in July. The rate of expansion was marked and faster than in June. On the price front, a marginal rise in costs was registered, whereas average selling prices were unchanged over the month.
However, it also highlighted that despite the uptick in growth, Indian manufacturers continued to cut workforce numbers in July. Nonetheless, the rate of job shedding was only marginal as around 96% of panellists reported no change in employment from the levels recorded in the prior month. Also, there was evidence of building pressures on the capacity of Indian manufacturers’ operations, as outstanding business was accumulated for the second month running and at the quickest pace since March. Concurrently, stocks of purchases were accumulated again in July and at a pace that was the fastest in the year-to-date. Conversely, holdings of finished goods fell, with survey respondents indicating that orders were often fulfilled directly from stocks. Efforts to address competitiveness were evident as selling prices were unchanged during July. Cost inflation was, however, weak in the context of historical data.
Pollyanna De Lima, Economist at Markit has said that this is a generally positive set of data; upcoming PMI data releases will indicate whether the manufacturing sector can sustain this momentum.The Nikkei India Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 300 industrial companies.